Chinese feedstuffs and additives manufacturer Jiangxi Zhengbang Technology is introducing several strategic investors through an issue of A shares worth as much as CNY 8.00 billion (USD 1.13 billion).
The Nanchang-based animal husbandry company intends to sell no more than 607.90 million new stocks, representing a 19.9 per cent post-offer stake, at CNY 13.16 apiece.
Subscribers include Zhengbang Group, Jiangxi Yonglian Agricultural Holding, Gongqingcheng Bangding Investment, Gongqingcheng Bangyou Investment and Guangxi Honggui Huizhi Fund Management.
Zhengbang is involved in the production and distribution of animal feed and feedstuff additives, hog farming, the provision of veterinary drugs, and the sale herbicides, insecticides, fungicides and plant growth regulators.
According to its website, the company was ranked 247th among the top 500 Chinese enterprises in 2019, and was 84th out of the country’s leading 500 private companies.
It is actively looking into ways to expand to retain its position within the agricultural industry; one such option is to continue scaling up its pig farming activities to gain a larger market share.
Zhengbang had an asset-liability ratio of 69.6 per cent, as at 31st March 2020, which limits its ability to obtain funds from banks and puts pressure on its balance sheet.
Proceeds from the offering will not only reduce this figure but will also supplement working capital and improve its financial structure.
Zephyr, the M&A database published by Bureau van Dijk, shows 7,371 capital increases have been announced globally in 2020 to date, of which 75 are worth USD 1.00 billion or more.
According to Zephyr, 108 of these cash calls target the agriculture, horticulture and livestock sectors and Wens Food accounts for the largest as it is raising as much as CNY 9.88 billion from a sale of convertible bonds.
Zhengbang’s private placement is the sector’s second-biggest capital increase of the year to date.
© Zephus Ltd